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Cattle Rise as Meatpacker Demand Outpaces Supply

Cattle futures rose for the first time in three days on speculation that U.S. meatpacker demand for animals is outpacing available supplies.

Source: Bloomberg Business Week; By: Whitney McFerron | May 26, 2010

Cattle futures rose for the first time in three days on speculation that U.S. meatpacker demand for animals is outpacing available supplies.

The U.S. feedlot herd was 3.4% smaller on May 1 than a year earlier, USDA said. By tomorrow, meatpackers will have processed an estimated 12.9 million head of cattle this year, 1.2% more than a year earlier. Wholesale-beef prices have surged 21% this year as herds shrank and demand rebounded, boosting meatpacker profits.

“We continue to kill as many or more cattle as a year ago, with fewer cattle on feed,” said David Kruse, a commodity trading adviser at CommStock Investments Inc. in Royal, Iowa. “Packer margins are still excellent,” spurring processors to slaughter cattle earlier at lighter weights, he said.